She was cut neither literally nor figuratively. There's a real distinction between terminating a fighter mid-contract, aka cutting a fighter, and opting not to renew their contract, aka a fighter entering free agency. I think Leslie Smith's situation is still worth discussing from many angles, but we should get the basic facts right. There's little value to opinions formed about things that didn't actually happen.
There's an obvious political angle here, because Smith was pushing a fighter's union, but other fighters who have pushed that same union have not been punished, for example, Al Iaquinta. It doesn't mean that the issue wasn't in play here, but it might mean it's not the only factor.
Deciding not to fight makes a lot of sense from Smith's perspective, but not wanting to recommit long term to a fighter who make such decisions makes sense from the UFC's perspective. Choosing to remove a fight from a card last minute took something away from paying fans and from the promotion. It was Smith's prerogative ad she exercised it, but it is very possible that the UFC not resigning her is in part a consequence of that choice.
And of course, Leslie Smith, while indubitably scrappy and tough, is not a particularly skillful fighter. She was 3-2-1 in Invicta and 4-3 in the UFC. She's slightly above average, she's at a place where she wants veteran pay, and she doesn't really have the name value to justify paying her more. If she weren't involved in the union and she didn't decide not to fight Ladd, it would not be all that controversial simply not to resign her based on her mediocre record.